An Oil Boom...In Switzerland?

Whenever we raise the issue of high corporate taxes, carried interst tax hikes or windfall profit taxes pushing companies out of the US, people act as if the threat of exit isn’t real. Of course it is. Capital is more mobile than ever and many of the world’s tax havens are very nice places to live and work.

One caveat: stay out of any place dependent on US government aid. Eventually they will crumble and turn everything over to the feds. Better to stick with stable, independent tax havens. Like Switzerland.

Reuters reports that energy companies are fleeing high taxes at home for the low tax haven of Switzerland.

The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom.

Yet a wave of energy companies has in the last few months announced plans to move to Switzerland — mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama’s tax-seeking administration.

In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes’ drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.

It still has a chocolate-box old town with views over a lake to the high Alps, but is now surrounded by gleaming corporate offices — including commodity trader Glencore and oil refiner Petroplus — shopping malls and housing developments.

Local authorities say about 13 per cent of full-time jobs in Zug canton are in the raw materials sector.

There’s an unnoted irony here. If you used a Swiss bank to dodge taxes, you’ll get prosecuted by the feds. It’s far better to just move your business there and avoid the taxes altogether.